Senate Majority Leader Scott Fitzgerald is shown on the floor of the Senate. The Senate failed to pass a bill that would have required health insurers to cover people with pre-existing conditions in its lame duck session this week.(Photo11: Mark Hoffman / Milwaukee Journal Sentinel)Buy Photo

The state Senate on Wednesday morning failed to pass a bill that would have required health insurers to cover people with pre-existing conditions, rejecting one of Gov. Scott Walker’s campaign promises.

Here’s a look at the issue — and what the law would have done to the insurance market if passed and if the federal Affordable Care Act went away.

Answer: Wisconsin is among the 20 states that filed a lawsuit in Texas in February to have the Affordable Care Act declared unconstitutional. In a hearing held in September, the states asked the court for a preliminary injunction suspending the Affordable Care Act or at a minimum striking down the parts of the law that prohibit health insurance companies from denying coverage for people with pre-existing health conditions or charging them higher rates.

The Trump administration partially sided with the states, asking the court to strike down the protections for people with pre-existing conditions, but not the entire law.

A. After attacks in the gubernatorial race for Wisconsin’s participation in a federal lawsuit, Walker promised to propose legislation that would require health insurers to cover pre-existing conditions if the Affordable Care Act was declared unconstitutional. He later added that he would propose legislation that had language similar to that in the Affordable Care Act.

Q.Would the state law have protected people with pre-existing conditions?

A. Not in the long term — or, in all likelihood, even in the short term.

If the Affordable Care Act was struck down and the state required health insurers to cover people with pre-existing health conditions and not charge them higher rates, health plans sold directly to families and individuals would be even more costly than they are now.

That's what happened in New York, which required insurers to cover people with pre-existing conditions before the Affordable Care Act. It also is what happened in other states that had a similar requirement and eventually were forced to abandon it.

Q. Is that why the Senate rejected the bill?

A. Probably not — though Democrats did note that premiums in the so-called individual market would skyrocket.

The key reason is that if the Affordable Care Act was declared unconstitutional — which the lawsuit filed by the Walker administration wants — the federal subsidies that help offset the cost of insurance for people with lower incomes also would go away.

That would mean that fewer healthier people could afford health insurance — and healthy people are needed to offset the cost of covering people with pre-existing conditions.

One of the main reasons — there are many — that the cost of health plans sold directly to individuals and families has increased since the Affordable Care Act went fully into effect is the market has drawn too few healthy people.

The problem would get much worse if healthy people who can afford health insurance only because of the federal subsidies were removed from the market, said Justin Sydnor, an assistant professor of actuarial science, risk management and insurance at the University of Wisconsin-Madison.

That’s because people with pre-existing conditions — who know they are going to have high medical bills — still would have a strong financial incentive to buy insurance.

Health insurers would have to cover them under the law that didn't pass — yet have fewer healthy people to offset the cost.

Q. So the federal subsidies are needed if health insurers are required to cover people with pre-existing conditions?

A. Yes.

Leanne Gassaway, senior vice president of state affairs for America’s Health Insurance Plans, the largest trade group for health insurers, said that requiring health insurers to cover people with pre-existing conditions without the federal subsidies in the Affordable Care Act was “the worst-case scenario.”

Washington required insurers to cover pre-existing condition at the same rates as other people in the 1990s. Health insurers eventually abandoned the market.

“Their market was a complete disaster before the Affordable Care Act,” Gassaway said.

Q. What happened?

A. Health insurers raised premiums to cover the costs of people with pre-existing health conditions, leading to fewer healthy people buying insurance. That in turn forced insurers to raise rates even more.

The end result was health insurance sold directly to individuals and families cost far more than in other states.

“You can’t protect people with pre-existing conditions by simply saying they are going to get coverage unless you address the economic realities of making health insurance affordable and viable,” said Sydnor, the insurance professor at UW-Madison.

Q. Then how could the Health Insurance Risk-Sharing Plan cover people with pre-existing conditions?

A. HIRSP was subsidized by a tax on health insurance sold in Wisconsin, and health systems, physicians and other health care providers were paid rates slightly above those for Medicare but much lower than those paid by commercial insurers.

Also, HIRSP covered only people who could afford health insurance. At its peak, it covered about 24,000 people in the state.

Q. But wouldn’t Walker’s program to help offset the cost of large medical claims for health insurers counter that?

A. No. The program is funded by federal dollars and is tied to the Affordable Care Act. If the Affordable Care Act was declared unconstitutional and went away, so, too, would the program — though the governor never noted this in the campaign.

Q. If the Affordable Care Act went away, what would happen to people who have pre-existing health conditions and who can afford health insurance only because they receive federal subsidies?

A. The governor and Republican lawmakers didn’t say.

Q. How many people in Wisconsin have pre-existing conditions?

A. The Kaiser Family Foundation estimates that 852,000 people in Wisconsin have a medical condition that could prevent them from buying health insurance on their own if the Affordable Care Act was declared unconstitutional — though most of them get coverage through an employer or through Medicare or Medicaid.

Q. Why did this become a major issue in the campaign?

A. Before the Affordable Care Act, health insurers could deny coverage or charge higher rates for medical conditions as common as high blood pressure and diabetes. They also could sell health insurance to someone but exclude coverage for a pre-existing condition.

Most people under 65 get health insurance through an employer in the private market. But people with pre-existing conditions know that they would be vulnerable if they lost their jobs. And the issue particularly resonates with parents of children who have medical conditions.

Q. Where do things stand now?

A. The Legislature passed a bill that prevents the state from withdrawing from the federal lawsuit that seeks to have the Affordable Care Act declared unconstitutional. Democratic Gov.-elect Tony Evers and Attorney General-elect Josh Kaul campaigned on withdrawing the state from the lawsuit.

Q. So the Legislature still wants the Affordable Care Act declared unconstitutional — even if it would mean that health insurers would not have to cover people with pre-existing conditions and would end other protections?

A. Apparently so.

Q. Who is opposing the federal lawsuits?

A. A group of states led by California have intervened in the lawsuit to defend the law. Amicus briefs opposing the lawsuit also were filed by the American Medical Association and by physician groups for family physicians, internists, pediatricians and psychiatrists. The American Hospital Association, the Catholic Health Association and other hospital groups as well AHIP, the trade group for health insurers, also filed briefs opposing the lawsuit. So, too, did the American Cancer Society, American Heart Association, American Lung Association and other groups.